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The Auto Bailout Was a Crony Pigout (It’s Worse Than You Think)

Peter Schweizer reports in the Washington Times, that as bad as many believe the auto bailout was, it is likely worse than they imagine.

For all the talk of jobs saved at GM, counting the GMAC component of the bailout deal still owes the taxpayers of the United States $41.7 billion.

Even though we are on the hook for this money, many other groups made out like bandits, including the UAW and some firms on Wall Street.

Evercore Partners, for instance, was enlisted by the government to find a buyer for GM. The only “buyer” they found was the American taxpayer. But despite this failing, Evercore, after its healthy fee of $46 million, was able to secure an additional $17.9 million for a “success fee.”

The CEO of Evercore was able to return the favor (to the administration, not the taxpayers) by raising $2.1 million at a gala dinner at his home for the president’s re-election campaign.

The whole bailout just stinks. But, it has proven politically popular in vital swing states.

(From the Washington Times)

“Reports that the auto bailouts will cost taxpayers $25 billion more than previously projected have sparked the predictable political squabbles that attend an election year. Liberals claim the cost to taxpayers was worth the price of saving American car companies, while conservatives grouse about what they see as government wasting more taxpayer money.

The reality, however, is uglier than either side realizes. Those behind the wheel of the automobile bailout were not folks who build cars but cronies who successfully leveraged their highly placed connections. Indeed, lift the hood, and what you find is that the auto bailout was a classic tale of cronyism, in which the well-connected sped away with big bucks.”

Agreed, the sums in question are offensive. Could you clarify your point, though?

Are you saying that no private parties should have been involved in the bailout? If that was the case, every right leaning party would scream corruption, regardless of the outcome. Not to mention that the government very likely would have accomplished a worse outcome (somehow) than the terms that were finally reached.

Are you saying that no bailout should have taken place? If that is the issue, then do you seriously believe we would have an auto industry in the US now, and if so, how? Everyone that actually participates in it seems to agree that Ford's orders alone couldn't have sustained the independent producers mutually supplying US manufacturers, and reciprocally, Ford is sustained by their products. One hand washing the other...

So are you saying that entire industry and its economic relata should be gone, or that the process was poorly managed?

The bail out I should say since Chrysler was given to Fiat and all they paid for was some tech transfer so on to GM .It was sop to the unions period it was a rigged bankruptcy with the bond holders getting the drive shaft .

We have to take things one step at a time, and getting Obama out is the necessary first step. Sure, I'd prefer Gary Johnson, but what good would it do to vote for him with our electoral system the way it is at the present time. We always talk about separation of Church and state, and that's important so long as we don't get involved in things like this HHS mandate crap, but that's actually interference in people's lives that goes far beyond religious freedom as it's forcing one person to pay for other people's stuff which is unconstitutional for other reasons as well. What we need is total separation of economy and state. That would really be an ideal to shoot for, in my opinion.

Curtis, a well considered opinion. We know it was "fair and beneficial" for those in the car business but was it fair to those of us in other small business that have to pay the bill? Nobody is bailing out my suffering machine shop and my tax has increased. Just askin...

was also the only thing that kept suppliers from having to go bankrupt aswell. had to do something to intervein. None of it was optimal. but economy was skinking like a rock and its a little bit safer now.

The bailouts- as outlined above were bad for the economy. Yes we'd still have an auto industry in the United States. What would have happened though is that many of those jobs would have gone to Alabama, Georgia and South Carloina (BMW and Toyaota are in these states) where there is no union power. The unions coun't have this, nor could their political allies- thus the bailout. We'd have a much more healthy auto industry today and bondholders and pensioners at Delphi would not have been stolen from had we not had the bailout.